If you're going to war, the last thing you want to do is provide the other side with the guns they'll use to shoot at you.
But that's just what General Motors Corp. has done as it battles with striking members of the Canadian Auto Workers union and grapples with the escalating shutdown of some of its U.S. operations.
Here's how: When GM lays off workers at plants that supply the striking factories, the automaker's employees still get as much as 90 percent of their regular pay through traditional state unemployment benefits and supplemental benefits included in the current contract.
So as the impact of the Canadian strike slowly spreads through GM's U.S. factories, the pain felt by the CAW's American brethren in the United Auto Workers union won't be nearly as severe as it might have been had they been the ones to walk out.
Make no mistake, the battle that the CAW is fighting over outsourcing -- a practice of sending parts work to outside suppliers -- is the same fight that is at the forefront of the automaker's negotiations with the UAW.
At least for now, GM's laid-off workers in the United States will be able to ride out the first round of the battle in relative comfort -- and that's a huge advantage. "I think this increases the leverage of the union in the United States," says Lou Jean Fleron, the director of Cornell University's New York State School of Industrial and Labor Relations.
If GM's laid-off workers didn't get the supplemental benefits that the company provides and were forced to get by on just $300 a week in state unemployment, their unplanned time off would sting a lot more. The bills would pile up faster and the economic reality of every missed paycheck would test the resolve of each union member.
GM realizes that, which is why the company argued last spring that it shouldn't have to pay for the state unemployment benefits of the workers it laid off because of a UAW strike at two parts plants in Dayton, Ohio. But those protests went nowhere.
And now, the same chain of events is unfolding -- albeit more slowly. "The practical impact (of a CAW walkout) is the same, and the UAW doesn't have any of the legal and organizational challenges that come with a strike," says Alex Blair, Cornell's director of labor programs. "It's a lot easier for the CAW to strike than the UAW, but it has the same impact."
For one, the CAW has a more militant history than the UAW, plus it has the protection of more friendly Canadian labor laws. "It's an easier group to hold together," Blair says.
At the same time, analysts estimate that the strike ultimately could cost GM up to $150 million a week and shut down all of its North American operations within three weeks.
Strikes at just a small portion of GM's operations can cripple the company's entire North American operations within weeks because the automaker uses a just-in-time inventory system that keeps only a small supply of parts in stock. When those parts run out, it sends ripples throughout GM's other operations.
But for now, GM has managed to cushion the blow from the strike in
the United States by anticipating a walkout and stockpiling parts, while also building up its inventory of vehicles.
As a result, GM has laid off only 2,000 U.S. workers, including 1,050 at its Tonawanda engine plant, during the first 10 days of the strike. In contrast, the automaker began closing assembly plants just three days after the Dayton strikes began last March.
"I think GM is looking long-term," Blair says. "GM is dedicated to outsourcing. How much of an economic price they're willing to pay for that is an open question."
GM says it needs to become more competitive by farming out work to outside suppliers, who often are cheaper because they pay lower wages to non-union workers. But the contracts that other automakers have negotiated with U.S. and Canadian unions haven't included the wide flexibility to eliminate jobs that GM wants.
The UAW's contract with Ford Motor Co., for example, includes a guarantee that its unionized work force won't dip below 95 percent of its current levels, barring eco nomic or market downturns. Someanalysts, however, say the guarantee includes loopholes that could let GM make some of the deeper cuts it seeks. The CAW's agreement with Chrysler of Canada, which was ratified last month, also includes strict limits on hiring outside suppliers.
As a result, some analysts say GM is buckling down for a long strike. GM Chairman John F. Smith Jr. indicated as much last week. "We've got certain things that will cripple the company if we don't get them fixed right," he said.
An independent study by Harbour & Associates released last May concluded that GM needed to shed about 33,000 workers from its assembly, stamping and powertrain operations to reach the productivity levels of Ford and Chrysler.
For now, both sides seem to be digging in. GM is boasting about the $12 billion in cash that it has stashed away to help it ride out the strike, while the CAW says its $36.5 million strike fund could last as long as eight weeks and stretch to 16 weeks if new credit is arranged.
It has all the makings of a showdown.